Analysis of the Effect of Monetary Policy on the Russian Federation

Salik Saliakhov

Bachelor's thesis

Abstract:

Based on the performed analysis, it is possible to suggest that the main determinants of the Russian real GDP are the inflation rate (the most influential one out of the selected three for the study) and the exchange rate. The effect of the exchange rate’s depreciation on the real GDP is positive and the effect of surges in the inflation rate is negative. According to the time series and descriptive analyses, it is concluded that the performance of the Russian economy in the period between 1996 and 2021 was positive – the dynamics of the Russian GDP was good, and the country reached a substantial increase in the overall size of the economy. When it comes to the price stability, the country managed to get inflation under its control. However, the country presumably followed a contractionary monetary policy in order to reach this goal, which is explained by the country having a relatively high interest rate of approximately 5 per cent on average. As it was already mentioned in the previous paragraph, the Russian Federation has almost certainly used a contractionary monetary policy expressed in raising its interest rate quite often in order to tackle surges in the exchange rate and the inflation rate. On the other hand, increasing interest rate became less effective for controlling the exchange rate that is mainly subject to fluctuations due to political instability and prices of oil.

Keywords

Russia, monetary policy, interest rate, recession, economy, sanctions

Language used: English

Date on which the thesis was submitted / produced: 20. 3. 2024

Thesis defence

• Date of defence: 23. 5. 2024
• Supervisor: doc. Mgr. Ing. Petr Wawrosz, Ph.D.
• Reader: David Křížek, Ph.D.

Czech University of Life Sciences Prague

Faculty of Economics and Management

Bachelor programme:
Business Administration